Blockholders and Leverage: When Debt Leads to Higher Dividends

摘要: This paper focuses on dominant owners’ use of leverage to finance their blocks and its relationship dividend policy. We postulate that the blockholders leads higher payouts lower investments because dividends are needed service blockholder debt (Debt Service Hypothesis). data for France where have tax incentives structure in pyramidal holding companies. find strong evidence our hypothesis: increase proportion owners. inspect entities individually received explained by obligation needs. Companies dominated levered invest significantly less. Alternative explanations payout policy pyramids, based or cash preferences, cannot explain pattern.